How to Get the Perfect Credit Score
You don’t need a perfect credit rating to access the best loan and credit card rates, but if you wanted to get it anyway, how would you get it?
As Michelle Singletari explains in The Washington Post , the number of people with an ideal credit rating of 850 has grown over the past year. 1.6 percent of Americans with a credit rating have an ideal 850, slightly up from last year’s 1.5 percent.
Singletary is one of those great credit rating agencies with a credit rating of 850 for over a year . My credit score is 803, which suddenly makes me feel inadequate – although both of our scores are high enough that a few points will not affect the types of loans and interest rates we are offered anyway. Once your credit rating is Excellent, which starts at around 740, you really don’t need to work to improve your score.
But let’s say you’re the kind of person who wants to get an 850 credit score just because they are there. What do you need to do to go from great to perfect?
Well, you probably already pay all your bills on time. You probably already have a long credit history, including credit accounts that have been opened for more than ten years. You may have additional types of loans (mortgages, car loans) along with your credit cards, which proves that you can manage several types of debt responsibly.
What you may not have is the right utilization rate . This is your ratio of debt to available credit – and when you are going to achieve your ideal credit rating of 850, you want your loan utilization rate to be as low as possible. As Singletary explains:
According to a recent FICO analysis, the average working capital utilization rate for consumers, with an estimate of 850, was just 4.1 percent.
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If you want to be in sparse account territory, pay off your balances in full each month and keep your utilization rates in single digits.
In other words: even if you are a person like me who pays your balance in full every month, you may still not get the perfect credit rating because your balance is too large between payments. We’re not even talking about a high danger zone . You can have a great credit utilization rate – Singletary notes that people with a rating above 800, on average, use 7 percent of the available credit , according to the FICO – and be slightly overpriced to get the perfect score.
Except that my current loan utilization rate is only 2 percent and my rating is still 803. According to Capital One’s CreditWise app, the main factor preventing me from achieving 850 points is “credit age” (my oldest account is 26 years old and they want up to 30 years) and “no experience in managing the first mortgage loan.” I’m not going to buy a house just to get an 850 credit score, as much as I want to close those last 47 points between me and perfection.
Another data point worth mentioning in this post is that not only has the number of people with excellent credit ratings increased this year, but the national average credit rating has also hit a new high of 706, which means more of us have good grades. credit than ever before. Let us continue to improve our reputation together by not allowing the best to be the enemy of the good.